Four-Period SMA Crossovers with Percentage Profit and Stop Targets

Summary

This document describes a short-term strategy that uses a four-period simple moving average (SMA) to generate long and short entries. It opens a long position when price crosses above the SMA and a short position when price crosses below it. Each trade uses entry-price-based exits, with stated defaults of a 2% take profit and a 1% stop loss. The document presents this as a 2:1 reward-to-risk setup.

The stated backtest configuration uses BTC/USDT futures on Binance over a two-day period from late 2019 to late 2024, but no performance results are reported. The document flags false signals in sideways markets, slippage from frequent trading, stop execution problems during sharp moves, and sensitivity to parameter choices. It suggests adding longer-term trend, volume, volatility, or time filters. These are proposed refinements; the supplied strategy logic does not include them, and the material provides no evidence that the defaults are profitable.

Key ideas

• Price crossing above or below a four-period SMA triggers long or short entries, respectively.
• The stated default exits target a 2% gain and a 1% loss relative to entry price.
• The strategy is designed for short-term trading and can trade in either direction.
• Sideways price action may cause false signals and frequent trades, while slippage can erode results.
• The published BTC/USDT futures backtest settings do not include reported performance results.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.